The Center for Venture Research at UNH today released their annual Angel Capital report for 2008. Angels invested $19.2 Billion in 55,480 companies, down 26% from last year. The report says there are 260,500 active angel investors in the USA. By comparison, Venture Capitalists invested to $28.1B in 3,630 companies in 2008, down just 9% from 2007. BusinessWeek says “All this is hardly surprising. After all, angel investors are wealthy individuals—and those folks have seen their net worth take a hit along with everyone else as the stock market and real estate values nationwide have plummeted.”
Healthcare Services/Medical Devices and Equipment (16%) accounted for the largest share of Angel investments, followed by Software with 13%, Retail with 12%, and Biotech 11%.
Angel Investors continue to be the largest source of seed stage and early stage start-up capital, with 45% of 2008 angel investments going there.
Mergers and acquisitions represented 70% of the angel exits, and IPO's 4%, in 2008. Unfortunately, bankruptcies accounted for 26% of the exits. Overall annual returns for angel’s exits were 22%.
Angels tend to invest just like VCs except they do smaller investments $200K to $2M and they do about 15 times as many deals. However, Angels have the same investment criteria and expectations of significant returns. The "average" angel group makes 8 investments per year for a total of about $2M. The average deal size (seed stage) is about $250K.
The larger angel groups in Silicon Valley and Boston do significantly more deals and invest between $350K and $600K per round, and maybe $1.5M to $2M per company.
Keiretsu Forum is the largest angel investor group in Silicon Valley has invested $115M in 125 deals since its founding. Band of Angels is another large Angel group in Silicon Valley having invested $130M in 220 companies since its founding.
Boston has around 20 Angel Capital groups. Some of the larger groups are; Beacon Angels, Boston Harbor Angels, Common Angels, eCoast Angels, Hub Angels, and Launchpad. See the Angel Capital Association site for leads to angel groups in other parts of the country.